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Construction Contract – What You Need to Know When You Remodel

May 30, 2017 , In: Advice, Repairs , With: No Comments

It’s finally your turn to oust the old kitchen appliances.

You’ve drooled over the renovations in every episode of “Fixer Upper,” flipped through every Kitchen and Bath Special Edition magazine, and took notes.

You know exactly what your new space should look and feel like, and you can’t wait to turn your dreams into a reality. But as you search for contractors, you read a few Yelp reviews and the excitement you once felt about your dream kitchen fizzles.

Stories of puke-pink walls, dents left in floors and a two-week job stretching into four months make you wonder if you can guard yourself and your home against such calamities.

The answer: Yes! You can avoid constructor nightmares if you use a construction contract.

Construction Contracts Ensure Your Expectations Are Met and Protect You From Damages

A good construction contract will include information about the work to be done and the work NOT to be done. It will lay out the time frame for start and completion, define how often the workers clean up, specify when and how often the contractor will communicate with you and list some of the finer points — like precise paint colors.

It will also define what will happen if something goes awry and specify who covers surprise costs.

Make Sure These 10 Terms Are Written Into Your Construction Contract

Having these details in writing not only protects you if things go wrong but also makes it more likely that things will go right.

  1. Contractor’s Name, Address and Phone Number:

    This makes it easy to keep in touch if problems arise. Make sure the address is a physical address and not a P.O. Box — just in case you need to stop in and make payments or for when you accidentally drop your phone in the toilet and it’s out of commission.

  2. Contractor’s License Number:

    This not only gives you peace of mind that the contractor knows what he’s doing but is also validation that he doesn’t cut corners.

    laying concrete

  3. Project Scope:

    This outline details what construction will happen and in what part of the house. This section of the contract will refer to the specification sheets that provide more detailed measurements and specs.

  4. Specification Sheets:

    These are separate sheets from the contract form, but are still part of the contract. From specific types of light fixtures to brand name paints, if you know what you want, this is where you write it down. Do you want the nail holes in your walls puttied? Tell them so here.

    This is also the place where the contractor specifies what he will do and what will be left up to you. Is he responsible for buying the faucets or just installing them? How often is clean up? What does clean up involve?

  1. Construction Schedule:

    Beware any contractor that hesitates to give you an estimated start and finish date. This is extremely important if you have to temporarily live elsewhere while your house is a construction zone. If time is of the essence, you might consider inserting a liquidated damages clause.

  1. Pricing Agreements:

    There are two main ways to price a remodel. Some homeowners prefer a bid that defines a fixed price for all work. This bid includes the contractor’s overhead and profit, but isn’t itemized.

    Others prefer a cost-plus contract, also referred to as an estimate. In this agreement, the contractor proceeds with work then bills for labor and costs as they occur. These usually include guaranteed maximum dollar amounts for purchases, and allow you to see exactly where your money is going.

    Don’t be shy about your budget! To avoid costly surprises, make sure to write it into whichever agreement you choose.

    You also need to include a hidden or changed conditions clause here to detail who’s responsible for extra costs if unknown structural damage is found.

    pile of money

  1. Payment Schedule:

    For large projects, you will pay a down payment upon the start of the remodel, then pay in increments when agreed upon milestones are met. A final payment will be made upon completion.

    For smaller projects lasting under 30 days, you will pay the down payment upon start and one final payment upon completion. Never pay 100% up front and never pay in full until you can fully use the remodeled area.

  1. Change Orders:

    You may change your mind during the remodel and if you do, you should outline how to handle this. Usually it is done through a change order that specifies the change in writing and addresses how the change affects the agreed upon price and schedule.

  2. Completion:

    Be sure to define what completion looks like in your contract. Make sure the contractor knows he doesn’t get full payment until all inspections are complete and all finish-work is done.

    This might require some give and take if there are a few hiccups at the end of the project. For instance, if the room is amazing and functional except for the dishwasher that’s on back order, you can subtract the value of the dishwasher, times two, and pay all but that amount. This ensures that the contractor comes back to install the dishwasher in a reasonable amount of time after it arrives.

  1. Warranty:

    Have your contractor guarantee workmanship and agree to fix any issues that arise from poor quality work. A one-year guarantee is standard.

One last note: Don’t think you must accept whatever boilerplate contract is tossed at you. Go over any contract carefully, and if need be, print up your own contract or make amendments to theirs. If you make sure everything is in writing you can remodel with confidence.

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Editor at Your Wild Home
Hey! I'm Megan. I am a dog-lover and enjoy exploring the outdoors. Your Wild Home covers a lot of topics, including (but not limited to) home improvement, home decor, construction, real estate, and sustainability. I enjoy writing in third-person and I am addicted to chocolate, coffee, and terrible puns. Learn more on my About Me page!
Construction Contract – What You Need to Know When You Remodel
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Construction Contract – What You Need to Know When You Remodel
Spring and summer are the seasons of home renovation! Here's what you should know about a construction contract before starting your project.
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